Wheels of Fortune: The Rise of Rapha

Simon Mottram, founder of cycling apparel brand Rapha, aims to do with bike culture what other brands have done with surfing: turn a niche sport into a lucrative platform for a global lifestyle brand.

Rapha Pro Team Collection Spring/Summer 2013 | Source: Rapha

LONDON, United Kingdom — When this reporter arrived at the headquarters of cycle apparel brand Rapha, located in a quiet street in Kentish Town, their public relations officer arrived at the door dressed head-to-toe in Lycra. She had just arrived by bike, she explained. Of course, everyone who works for Rapha travels by bike and many compete in road racing competitions. But this is not the inner sanctum of a niche sports cult. Rather, the old piano factory that houses Rapha’s offices is the central hub of an emerging lifestyle brand that — neatly positioned to ride the wave of cycle culture that’s been sweeping the globe — has grown 80 percent over the last 6 months and is projected to bring in £26.5 million (about $39.6 million at current exchange rates) in 2013.

Despite its current success, when founder Simon Mottram, a passionate cyclist and former branding adviser to companies such as Chanel and Burberry, went to raise funding to realise Rapha, back in 2001, investors did not share his vision. At the time, hipsters were not yet riding fixed-gear (“fixie”) bikes and middle-aged-men-in-Lycra (“MAMILs”) were not yet a familiar sight.

“Just to step back in time; it was cycling, which was super geeky and unfashionable then, so that turned off 95 percent [of potential investors],” recalled Mottram. “Secondly I wanted to sell clothing online, which in 2001 to 2002 wasn’t very common. Thirdly, I was going to sell clothing to men. And fourthly, I was going to charge higher prices, because I thought men would pay.” It took over 200 meetings to scrape together enough money to launch the company, which he managed to do with only £150,000, less than half of what he had initially sought.

Simon knew he would have to weave a powerful mythology around both his beloved sport and his nascent brand if he was going to sell racing vests at £120 each when those currently on the market averaged £50. So he set about telling the story of cycle culture at large, while weaving Rapha into it. “We are trying to explain it to people and piece it together. The key to Rapha is about connecting more people to the sport and making the sport great.”

In this spirit, Rapha launched, in 2004, with an exhibition staged in the Truman Brewery in London’s Brick Lane during the Tour de France. The company screened stages of the Tour each day and exhibited cycling imagery from the 1950s and 1960s, when riders were fêted as film stars.

Rapha’s message failed to have immediate impact, however, and in its first three years, the company grew slowly. By 2007, Rapha had only 7 employees and 11,000 customers worldwide.

But in 2008, everything changed. “It just exploded in London. I guess it was probably when the Tour came to London and the whole ‘fixie’ thing was really at its peak,” said Mottram. “We took a big step and made our first profit in 2008. We’ve grown by 50 to 70 percent a year since then — last year was 50 percent — and we took in £17 million in revenue.”

It’s not just the UK that is doing well for Rapha. In fact, only 27 percent of Rapha’s sales are domestic, with the US and Japan comprising most of what remains, followed by Continental Europe. “We have always been international. Cycling is such a tight community, so you can get to those influencers. That’s what I spent a lot of time working out: how do you get to those passionate people like me in every part in the world?”

Launched online, Rapha first dipped a toe into physical retail in 2010 with a series of international pop-ups in London, New York, San Francisco, Osaka and Tokyo. “The idea wasn’t to be a store, it’s a whole cultural surrounding, mixing content, events, food and drink, all for the person who likes road cycling,” said Mottram.

Even now, Rapha does not have conventional stores. Instead, they have “cycle clubs.” Sitting in London’s Soho branch, which opened in 2012 — they are also in San Francisco, Osaka and Sydney, with plans for 12 more — the culture Mottram has grown around the brand is tangible. These hangouts, which are Rapha’s main point of contact with consumers, sell high-end coffee and food, as well as clothes, and show cycling road races on big-screen TVs.

While this reporter was there, a stage of the Tour de France had just kicked off and a large number of coffee drinkers — “in the UK, the States and Australia it’s all the same guys who are into cycling and coffee” — watched keenly, while others floated into the space to buy vests, bags and branded water bottles. Rapha secured a contract to make the kit for Team Sky, the cycling world’s first ranked team, which has helped to fend off accusations from serious cyclists that the brand is too slick and lacks legitimacy. The company’s Team Sky replica kit, which launched in January, already makes up a sizable 11 percent of Rapha’s overall sales.

Clearly, Rapha are not alone is seeing and seizing the opportunity in cycle culture, which, in recent years, has sprouted up all over the world. In London’s Soho, mere metres from Rapha’s cycle club is Kinoko cycles, a café-cum-shop that began as a Japanese import business and which now has its own clothing line and repair service. Go a few metres more and there’s H2 Bike Run, which provides commuters with secure space to store their bikes, as well as showers, a dry cleaning service and access to bike mechanics.

But looking ahead, Mottram has a broader vision for the business he has built.

“We don’t want to be a niche brand in a niche sport. My ambition is to make the sport more popular, but we can’t do that by selling Lycra shorts, it’s not enough,” he said. “I think that cycling as a sport is interesting, beautiful and rich enough to be a platform for a whole lifestyle — and that could support a fantastic fashion and style range of clothing, which we’re already doing.”

“What I would like to do — which is what the surf brands have done — is to take the idea of a sport and project it into clothing that anyone can wear at any time.”

As an indication of just how large the opportunity might be, the global market for surfwear and surf-inspired clothing is estimated to be worth about $13 billion per year and has given rise to megabrands like Rip Curl, Quiksilver and Billabong.

At Rapha, non-core product, including a denim line, already makes up about 25 percent of overall sales. But Mottram — who has experimented with designer collaborations with Timothy Everest, Paul Smith and Christopher Raeburn (who happens to be the brother of Rapha’s lead product designer, Graham Raeburn) — sees that figure rising to as much as 50 percent and more over the next three to four years as Rapha transitions from being a niche producer of high performance cycle wear to a full-fledged lifestyle label that takes its cues from cycling culture.